Amid increased volatility, fueled by global trade tensions, investors reduced risk in June, departing equity funds in favor of fixed income funds.

Recent data from Morningstar indicate June 2018 was the worst month for equity fund flows, including mutual funds and exchange traded funds, since August 2015.

“Overall, long-term U.S. open-end funds and ETFs had their greatest outflows since August 2015 of approximately $22.1 billion,” said Morningstar. “The bulk of these outflows stemmed from U.S. equity, which saw $20.8 billion of outflows—$17.1 billion from active funds and $3.7 billion on the passive side.”

June Offenders

International equity funds, including emerging market funds, were hit hard by outflows last month as investors grew pensive about the specter of a full-blown trade war between the U.S. and China. For example, the iShares MSCI Emerging Markets ETF (NYSEArca: EEM) saw June outflows of $5.35 billion, more than any other ETF.

“International-equity funds suffered the most outflows since 2008 with $9.8 billion in outflows, which was due largely to emerging-market outflows,” said Morningstar.

The Vanguard FTSE Emerging Markets ETF (NYSEArca: VWO) and the iShares MSCI EAFE ETF (NYSEArca: EFA) also saw large departures in June.

“Investors may have gotten spooked by the turmoil in emerging markets, which left the average diversified emerging-markets equity fund down 8.9% over the past three months,” according to Morninstar. “Investors pulled about $8 billion from diversified emerging-marketsequity funds, the greatest net redemptionin at least a decade.”

Some Winners

One of the areas investors favored last month was short-term bonds. Funds such as the Vanguard Short Term Bond (NYSEArca: BSVadded new assets. The Vanguard Short-Term Bond fund tries to track the performance of a a market-weighted bond index that covers investment-grade bonds with a dollar-weighted average maturity of 1 to 5 years.

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